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With millions of workers currently being furloughed under the government’s coronavirus job retention scheme (JRS), Harrogate law firm LCF Barber Titleys is detailing what the latest government clarifications mean for both employees and employers.
The JRS is due to last for three months ending on 31 May 2020. Under the scheme, employees can be put on furlough leave and up to 80% of their wages will be reimbursed in the form of a government grant of up to £2,500 a month. Employers can then decide whether to top up the remaining 20%.
Research by the Resolution Foundation and the British Chambers of Commerce has revealed that a total of 9 million people will be furloughed in the UK. The figures show nearly a fifth of smaller businesses will furlough all their staff and half of companies are moving most of their staff into the scheme.
James Austin, associate solicitor from the employment team at LCF Barber Titleys, said:
The JRS has been largely welcomed by employers that would have otherwise had to make large numbers of people redundant, which would have been catastrophic for individual’s incomes and the economy as a whole.
As a result, the legal industry and HR teams have had to quickly familiarise themselves with the rules surrounding furloughing employees, but because the scheme was introduced very quickly, there have been several questions and grey areas, which the government is trying to clarify. Following the latest guidance update, it’s becoming clearer how the scheme will work, and there are lots of aspects that both employers and employees should be aware of.
LCF Barber Titleys, which is part of LCF Law with additional offices in Leeds, Bradford and Ilkley, has compiled a list of key questions relating to the JRS that have recently been answered:-
Who can be furloughed? All employees that joined a PAYE scheme on or before 19th March 2020, including zero-hour workers, across nearly all industries. However, it isn’t available to self-employed people and freelancers.
How do you claim furlough wages? Employees don’t need to do anything. It’s the employer’s responsibility to apply for the scheme via HMRC’s online portal and inform the employee they are being placed on furlough. HMRC will then pay the grant back to the employer rather than the employee.
- When will employers be reimbursed for wages paid to furloughed staff?The new online portal is expected to be up and running on 20th April with the first payments expected shortly thereafter.
- Should employers cover the extra 20% in wages? They don’t have to, it depends on the employer and this is at their own discretion.
- Can an employee roll on and roll off furlough? Periods of furlough leave must be taken for a minimum of three weeks and this can be broken up over the three months, so employees could be recalled, if workloads suddenly increase, before potentially being furloughed again.
- Can a person be made redundant during furlough leave? Yes, employers can still make people redundant whilst they are on furlough leave, but it won’t affect redundancy pay rights and employers should still follow a full redundancy process.
- Can employees who are unable to work because of childcare responsibilities be furloughed? Yes, as can employees who are unable to work because of other carer obligations.
- Should sick pay be paid during furlough leave? The usual rules surrounding sick pay will apply if an employee becomes ill whilst they are furloughed. This means employees that are entitled to company sick pay, should be paid it if they become ill, unless a contractual change is agreed before the employee accepts being put on furlough.
- What about holiday pay during furlough leave? New legislation means employees who haven’t used all their statutory annual leave entitlement due to Covid-19 can carry over up to four weeks of unused leave into the next two years.